Dow Takes Triple-Digit Loss; Dollar Rises

NEW YORK ( TheStreet) -- The Dow finished with a triple-digit loss Thursday as a stronger dollar pressured equities and commodities in the afternoon.

The Dow Jones Industrial Average fell 133 points, or 1.3%, to 10,308. The S&P 500 slid 13 points, or 1.2%, to 1096 and the Nasdaq was off by 27 points, or 1.2%, at 2180.

Though tech stocks struggled Thursday, a cadre of sector players reported earnings after hours that will set the stage for Friday's session. Leading the charge is Research in Motion ( RIMM), as shares jumped more than 12% in extended-hours trading. The BlackBerry maker fended off increasing smartphone competition from the likes of Apple ( AAPL) and Motorola ( MOT) during the third-quarter, blowing past estimates with a 41% boost to its top-line and a profit of $1.10 a share.

But market observers turned sour on fellow smartphone maker Palm ( PALM), despite a narrowing loss. The company reported an adjusted loss of 37 cents a share in the second-quarter. Shares slipped more than 2% after the company missed forecasts.

Oracle ( ORCL) shares went 3.6% higher in after-hours trading, as the software maker reported earnings of 39 cents a share after the closing bell, beating the 36-cent consensus.

As stocks dipped on Thursday, the market clearly took its cue from dollar moves, according to one analyst. The dollar index was last up 0.8% at 77.73 and near a new session high of 77.94.

"We're absorbing the pressure well, but this is pressure. It's directly related to the dollar. Don't make any bones about it," says Cantor Fitzgerald U.S. market strategist Marc Pado. "We had a breakdown in the euro below $1.45, which was a stop point. It came under heavy pressure against the euro and that got the ball rolling.

"All in one fell swoop, the dollar wiped out the last three months of downside in the last two weeks," added Pado. "That's a very significant move, especially for the dollar. Everyone knows about the dollar carry trade that's on. That's a painful reminder when it moves like this what the potential is for unwinding this trade."

The greenback's strength pressured commodities in the afternoon, dragging down related materials stocks. The February gold contract shed $28.80 to settle at $1,107.40 an ounce. The Philadelphia Gold and Silver Index slumped by 5.1% today.

The euro slumped to $1.43 vs. the dollar, pressured by the S&P's lowered long-term credit rating on Greece Wednesday to BBB+, from A-, with a negative outlook.

"Due to upward revisions to our projections of Greece's general government debt and deficit levels, and the anticipated cost to the government of servicing these obligations, we see Greece's fiscal flexibility diminishing more than we had previously expected," said S&P primary credit analyst Marko Mrsnik, who expects Greece's government debt to rise to 126% of gross domestic product in 2010 and 138% of GDP in 2012.

"In our view, the increasing debt-service burden narrows the scope for debt stabilization, particularly against the background of what we expect will be a significantly weaker near-term economic growth environment."

Crude oil whipsawed Thursday after surging Wednesday on an Energy Department report showing lower inventories last week. The January crude contract settled at $72.23 a barrel, losing only a penny after recovering late in the afternoon, though the contract fell as much as $1.53, pressured by the dollar.

The NYSE Arca Oil Index, which was off by more than 4% earlier, declined by 1.6% today.

Natural gas futures surged 31 cents to $5.77 per million British thermal units on a report showing a bigger-than-expected drawdown on inventories last week.

Financial sector shares also were leading decliners, with the KBW Bank Index and the NYSE Financial Index down 1.5% and 2.4%. Shares of Citigroup ( C) dropped 7.3% after the U.S. Treasury opted not to immediately sell its stake in Citigroup ( C) when the bank priced its stock offering at a lower-than-expected $3.15 a share late Wednesday.

Shares of Discover Financial Services ( DFS) declined by 9.1% after the company said higher credit card delinquencies pressured earnings.

Late Wednesday, Bank of America ( BAC) announced that its former consumer banking head Brian Moynihan would succeed Ken Lewis as CEO. Shares traded 2.8% lower at $14.86 on Thursday.

Adding fuel to the downbeat day, the Senate Banking Committee approved Fed Chairman Ben Bernanke's nomination for a second term Thursday, but not without some political saber-rattling. Though the confirmation vote for the Time magazine "Person of the Year" is now moving to the full Senate, even committee members voting in favor have voiced some criticisms of Bernanke's performance. The vote passed 16-7, highlighted by a no vote from Sen. Richard Shelby, (R., Ala.) the ranking Republican on committee.

"The market likes certainty. It's just natural," said Pado. "So when you throw so much uncertainty on arguably the most important position in the government at this point in time, that's a lot for the market to handle. In fact, I'd say the market is doing a hell of job today under these circumstances."

Earlier, weekly jobless claims came in at 480,000 for the week ended Dec. 12, compared with 473,000 the previous week, which was downwardly revised from 474,000. The figure was higher than the 465,000 new claims that economists had been expecting. Continuing claims rose 5,000 to 5.19 million in the week ended Dec. 5, exceeding forecasts for 5.17 million.

The Conference Board said leading indicators rose for the eighth consecutive month, up 0.9% in November vs. the 0.7% increase that economists had been anticipating. The Philadelphia Fed rose to 20.4 in December, beating economists' expectations for a reading of 16.

FedEx ( FDX) said earnings fell 30% in the second quarter but met analysts' expectations. Shares, however, fell 5.5% after the delivery company issued disappointing third-quarter guidance.

Rite Aid ( RAD) also beat analysts' estimates and narrowed its loss in the third quarter.

Shares of General Mills ( GIS), meanwhile, rose 1.1% higher after the company reported a 50% spike in second-quarter earnings and raised its 2010 earnings guidance.

Overseas, Hong Kong's Hang Seng fell 1.2%, and Japan's Nikkei declined 0.1%. The FTSE in London declined by by 1.9%, and the DAX in Frankfurt went lower by 1%.

A new study by researchers at the Federal Reserve Bank of New York suggests that bondholders still don't believe the government would ever let the firms collapse into bankruptcy -- after a decade of efforts by regulators to convince them otherwise. But at least one analyst who tracks big Wall Street firms' bonds says there may be an even bigger problem: Investors, pressured by the need to generate income, simply don't care whether the banks are too big to fail -- one way or the other.

Goldman Sachs Group Co-President and former CFO Harvey Schwartz will retire April 20, the company said Monday in a press release. The announcement came just days after the Wall Street Journal reported that CEO Lloyd Blankfein is preparing to step down, possibly later this year.